New York-based private equity firm Warburg Pincus LLC is taking profit from its investments in Converge ICT Solutions Inc., which is scheduled to hold an initial public offering this month.
Coherent Cloud Investments B.V., a company managed by Warburg Pincus, will sell more than 1 billion common shares in Converge ICT.
The sale of Coherent Cloud’s 1 billion shares, at an offering price of up to P24 apiece, will generate P24 billion in proceeds.
This will reduce its Converge ICT stake to 13.8 percent from 29.03 percent, assuming the over allotment option is exercised.
Converge ICT’s latest prospectus filed with the Philippine Stock Exchange showed that Coherent Cloud would convert its 2.045 billion preferred shares in the fiber internet company into common shares at a conversion ratio of 1:1. The conversion will take place on the pricing date of Converge ICT.
Using its 2.045 billion common shares, Coherent Cloud will sell up to 1.011 billion shares during the IPO, including the over-allotment shares.
Warburg Pincus signed a deal with Converge ICT through Coherent Cloud in 2019 via a $225-million investment.
Comclark Network and Technology Corp., a company owned by Dennis Anthony Uy, owns 70.97 percent stake in Converge ICT, will also issue up to 238 million common shares including over allotment shares during the IPO. This will generate P5.7 billion in proceeds.
Converge ICT will not receive the proceeds from the sale of secondary and over-allotment shares to be sold by Coherent and Comclack.
Meanwhile, the net proceeds from the sale of primary shares amounting to P11.5 billion will be used to finance capital expenditure requirements to accelerate nationwide fiber network rollout and other general corporate purposes.
Converge ICT is pursuing an expansion program with the aim of reaching 55 percent of the total households in the Philippines with fiber network by 2025.
The company said to achieve the target, it would spend P30 billion in capital expenditures from the second half of 2020 to 2021.
The company had 732,000 residential subscribers as of the first half of 2020.
The final offer price for Converge ICT will be determined on Oct. 9 following the book-building process.
The offer period will be from Oct. 13 to 19.
The Securities and Exchange Commission and the Philippine Stock Exchange already approved the P41.55-billion IPO of Converge ICT, which would become the largest in the domestic market.
Converge ICT is expected to have a public float of 23 percent after the IPO, assuming the over-allotment option is fully exercised.